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The same but different: heading off generic market entry which does not patent infringe

A preliminary discovery application brought in the Federal Court of Australia by GlaxoSmithKline Australia Pty Ltd (GSK) shortly before Christmas has sparked interest in the potential for patentees to prevent non-patent infringing generic pharmaceutical products entering the Australian market.

Background facts

The paracetamol market in Australia saw significant legal attention in the last months of 2014. In October, following GSK’s commencement of proceedings, Apotex Pty Ltd and Generic Partners Pty Ltd gave undertakings to the Court not to supply generic products (which they had admitted an intention to sell) falling within the scope of GSK’s sustained released paracetamol patent (the Patent), pending the outcome of infringement and invalidity proceedings in respect of the Patent. GSK has marketed its sustained release products, Panadol Back and Neck Long-Lasting and Panadol Osteo, in Australia since 2000 and Panadol Osteo is the only long-release paracetamol product listed on the PBS, the Australian government subsidy scheme for medicines.

The preliminary discovery application

In November, GSK set its sights on Pharmacor Pty Ltd, which had obtained regulatory approval, and applied for entry on the PBS, for its sustained release OSTEOMOL 665 PARACETAMOL products (the Pharmacor products). GSK applied for preliminary discovery from Pharmacor of various materials, including technical information submitted by it to the Therapeutic Goods Administration (TGA) in support of its approval application. In Australia, a party may be granted preliminary discovery where it reasonably believes that it may have the right to obtain relief from the Court, and requires the materials sought to allow it to decide whether to start Court proceedings.

GSK claimed that it reasonably believed it might be entitled to injunctive relief for breach of provisions of the Australian Consumer Lawprohibiting misleading and deceptive conduct, and required the documentation sought for this purpose.

The Patent claims a pharmaceutical composition comprising a bi-layer tablet having an immediate release phase of paracetamol and a sustained release phase of paracetamol, each layer in certain proportion and the composition having a specified in vitro paracetamol dissolution profile. Correspondence between GSK and Pharmacor indicated that the Pharmacor products did not have the claimed dissolution profile and that the immediate release and sustained release phases were in equal proportion, which did not meet the requirements of the claims. Pharmacor had nevertheless obtained TGA approval for the Pharmacor products as generic products on the basis of bioequivalence with the Panadol products and sought to have the Pharmacor products listed on the PBS as a “new brand” of Panadol Osteo.

GSK claimed that it had reason to believe that the Pharmacor products were not fully therapeutically equivalent to the Panadol products, even though they might meet the TGA bioequivalence requirements. In particular, it pointed to the fact that while the maximum plasma concentration level and bioavailability of the active ingredient might be equivalent in the respective products, in a modified release product, the time taken to reach a therapeutically active plasma concentration level and duration of time over which that concentration level is maintained, are equally important. GSK argued that the differing dissolution rate of the Pharmacor products (a necessary implication of the patent non-infringement position taken by Pharmacor) gave rise to the prospect that these additional features of “therapeutic equivalence” might not be met. On this basis, so the GSK argument went, it would be misleading and deceptive for Pharmacor to market the products as bioequivalent to the Panadol products.

The outcome

Pharmacor had indicated to the Court that the only relevant statements it would make to pharmacists and consumers in marketing its product were to the effect that the TGA had approved the products as being bioequivalent with the Panadol products, and that they had been approved on the PBS as interchangeable with the Panadol Osteo product. It indicated that it would not refer in general terms to bioequivalence or interchangeability of the respective products. Notwithstanding this self-imposed limitation, Justice Beach found that GSK had a potential claim against Pharmacor. While such statements were literally true, they could potentially mislead by constituting a half-truth or omission as to other possible therapeutic differences between the products.

It was firstly clear that there were differences between the Pharmacor products and the Panadol products. Caught on one side by the prospect of patent infringement, Pharmacor was forced to accept that the dissolution profile of its products did not match that specified in the Patent; on the other hand it was not contested that the Panadol products were within its scope. This constituted a meaningful difference between the respective products. Justice Beach did not consider the conclusion of the TGA that the products were bioequivalent to preclude this finding. The concept of bioequivalence as used by the TGA had a “degree of imprecision and variability”, on one view aligned with the overriding safety and efficacy imperatives governing its activities. The very fact that the products had differing dissolution profiles, yet were found bioequivalent by the TGA, illustrated this point. While not reaching a conclusion on the point (this was indeed the very purpose of obtaining the preliminary discovery), Justice Beach determined that GSK had a reasonable belief that Panadol Osteo had different therapeutic effects to the Pharmacor Products.

Although Justice Beach found that Pharmacor had not engaged in any misleading conduct in its dealings with the TGA and in relation to entry on the PBS, he concluded that end consumers could take the statement “approved by the TGA as bioequivalent to Panadol Osteo” to mean that the Pharmacor products delivered all the same benefits as Panadol Osteo. Pharmacists could also gloss over relevant distinctions and were likely to treat the products, for all relevant purposes, as the same as the Panadol Osteo products. As a result, Pharmacor could not “hide behind” the TGA’s labels or ascriptions. A potential claim for misleading conduct in breach of the Australian Consumer Law was made out, and preliminary discovery granted on that basis.

Implications

Pharmacor was required to provide the relevant material to GSK by 14 November 2014. From 1 December 2014 the Pharmacor products were listed on the PBS, GSK having taken no injunctive action in the meantime, despite presumably receiving the relevant material from Pharmacor under the preliminary discovery application. This was significant not only for Pharmacor’s market entry, but also to GSK’s positionvis a vis the other generic companies who had given undertakings to the Court not to market their generic products. Following the launch of Pharmacor’s products, Apotex and Generic Partners applied to the Court to be discharged from their undertakings not to market, on the basis of the change of circumstances brought about by Pharmacor’s market entry. These applications were ultimately not successful, however given the potential implications (foreshadowed in the original preliminary discovery application), one expects that the material discovered by Pharmacor may not have been sufficient to support the existence of therapeutic differences, so as to give basis for injunctive relief.

Nevertheless, as we see more and more formulation patents, which allow greater possibilities for generic companies to market products containing the same active ingredient without infringing a relevant patent, the prospects for this kind of case appear greater. There may also be opportunities for innovators to seek to prevent generic companies promoting products as generic equivalents after patent expiry (even of an API patent) in any case where the formulation of the generic product is different to that of the original patented product, if a therapeutic difference can be established to flow from the different formulation.

The squeeze between patent infringement and bioequivalence for the purposes of generic regulatory approval seems well worth innovators exploring further.

Compare jurisdictions: Arbitration

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